CHENNAI: When Abhishek Vijayan, an IT employee, opened the Ola app one morning recently, he was aware of ‘surge pricing’ that used to be the norm with cab companies. “I clearly remember there was no surge pricing at the time as I look out for it every time,” he said. “Besides, I did not get any notification informing me of surge pricing at that hour, and it didn’t look like there was a shortage of cabs on the road.”
However, at the end of his trip, instead of the expected fare, he was given a slip of Rs 50 extra. “Though I took up the matter with the customer support, all I received was repeated jargon on how surge pricing is clearly notified by an upward arrow for that cab category, and elaborate explanations on how it is calculated.”
Surge pricing is justified by cab aggregators as a way to meet demand during peak hours. As Uber describes on its website “Rates increase to ensure reliability when demands cannot be met”. However, the users claim that cab companies use surge pricing at almost all hours.
Abhishek is not an isolated case. Customers of taxi aggregator apps have been at the receiving end of ‘invisible’ surge pricing where the notifications of increased fares have been toned down. “Since the widespread protest by cab drivers across the country about not sharing the spoils of surge priced rides, the ‘surge’ pops don’t come up anymore when I book a cab,” says Mani Sankar, an engineering trainee at a vehicle manufacturing company in Sriperumbudur. “The sharp difference in pricing can be observed when you book a cab in the morning (Rs 30 for 4 km before 8 am) and evening (Rs 65 for the same at 6 pm).”
However, it seems that the customers are not the only ones at the receiving end.
Despite surge prices, drivers in these platforms have seen their incentives go down, due to which they have on strike several times. “Uber and Ola had initially promised earnings of Rs 1 lakh per month to these drivers, and hoping to cash in on it, several drivers bought their own vehicles,” says Rohit Koshy, a member of Baxi, a bike taxi app operating in Delhi-NCR region. “When a funding freeze was announced last year, they started reducing drivers’ incentives, since increasing the base fares would drive away customers. Even if the cab unions go on strike, it’s their loss as they cannot earn that day,” he adds.
Several cab unions have called for launching their own apps so that both customer and drivers can be satisfied without what they call ‘exploitative’ pricing. Team Baxi, for instance, this week launched a cab app with fixed rates for the benefit of both the customer and the driver. “It will allow the driver to make a living while the customer will not have to worry about surge pricing. Also, the app will allow for curbside pickup and drop with local cabs right outside your pickup location.” Team Baxi is in talks with four unions in Chennai and has already rolled out the app.
As far as surge pricing goes, the Competition Commission of India (CCI), which ensures that competitive markets are maintained without affecting the interests of the consumer, is studying surge pricing and the algorithm behind it so that it can come to a reasonable conclusion. However, this is likely to be complicated by the fact that Ola and Uber see themselves more as providers of technological solutions to connect rider and driver, rather than full-fledged cab companies.